ECB's Holzmann warming to June rate cut but keeping an eye on Fed

VIENNA - The European Central Bank could start cutting interest rates in June as inflation may fall quicker than expected but should not get too far ahead of its U.S. counterpart, as that diminishes the potency of easing, Austrian policymaker Robert Holzmann said.

But he warned that if the U.S. Federal Reserve does not cut rates in June, the market reaction to the policy divergence would negate much of the benefit of an ECB cut, so the central bank should be careful in going it alone. Part of Holzmann's growing acceptance of policy easing lies in an increasingly benign inflation outlook and economic weakness, with the euro zone currently skirting a recession for the sixth straight quarter.

The euro area is also at a competitive disadvantage due to higher energy prices and trade restrictions on much of its eastern flank, so it also faces more muted growth prospects than many others. Fact Check: Video Purports to Show Trump Only Partially Mouthing Words to the Lord's Prayer. We Tracked Down Its Origin

Source: Loan Digest (loandigest.net)

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